NAVAL gazing was certainly the order of the day at accountant Moore Stephens operating costs seminar in London on 27 October.
In the chair was our friend and Moore Stephens partner Richard Greiner – one of the best known beards in shipping – with Simon Newman of ICAP Shipping and Bob Bishop from V.Ships.
Although there has been plenty of gloom and doom around, the IMF sees world GDP growth returning. And world GDP growth correlates well with freight rates. However, over-tonnaging remains a concern and falling newbuilding prices and cancellations have led many owners to forfeit their deposits and re-order at lower prices "meaning some of the orderbooks are beginning to bulge once more," the audience heard from Simon.
In a period of reduced rewards, managing operating costs is essential and cost control will remain in focus Richard told the audience. Crew costs are evidently an important part of the mix and there continues to be inflation in costs, particularly in the tanker sector because of the crew shortage, but costs fell in the container sector last year.
Moore Stephens expects crew wages to grow 2.7% this year and 3% in 2011, with other crew costs up 2% and 2.4% respectively. Crew supply was the most important factor influencing operating costs, the Moore Stephens OpCost 2010 survey found. Captain Bob of V.Ships agreed that crew costs were likely to be the most significant driver. They went up 20% year on year up to 2008, although he said he hoped that a flatter level would be maintained this year. There remains an undersupply of officers of the order of 30%, according to Bob, although there was no shortage of ratings.
Ship vetting requires really competent people both on ships and shoreside, he said and therefore a good deal more training was being done on ships than in the past. Quality crew are always going to have a premium, he said, and the parsimonious attitude of some operators contradicted the fact that the biggest saving on operating costs came from having a good crew and good shore staff.
Hear hear! After all, don't we always hear CEOs saying that people are their most important asset.